California Oil Producers Unlikely to Ramp Up Drilling Despite Soaring Prices

Aging fields, volatile markets, and regulatory uncertainty make new projects a tough sell in the state

Mar. 14, 2026 at 10:00am

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Despite skyrocketing global oil prices following the U.S. and Israel's invasion of Iran, experts say California oil producers are unlikely to significantly increase drilling in the state's aging fields. Factors like the unique geology of California's heavy crude, the high costs of new projects, and the unpredictability of oil prices make companies wary of ramping up production, even as the state has recently streamlined permitting for new wells.

Why it matters

California's declining oil production has contributed to the closure of several refineries in the state, raising concerns about future gasoline price spikes and supply shortages. While the state is working to transition away from fossil fuels, experts say the transition needs to be carefully managed to avoid disruptions in fuel availability.

The details

California oil production has been declining since the 1980s as existing fields become depleted and it becomes more economical to produce oil in other parts of the country. Recent refinery and pipeline closures in the state have further complicated the situation. In an effort to boost production, the state recently streamlined permitting for up to 2,000 new oil wells in Kern County, but oil companies say factors like the high cost of new projects and uncertainty around getting their product to market are still limiting new drilling.

  • In September 2025, Gov. Gavin Newsom signed a bill to streamline permitting for up to 2,000 new oil wells in Kern County.
  • Since the new permitting law took effect in 2026, the California Geologic Energy Management Division has permitted 139 new wells in Kern County, more than the 121 wells permitted from 2023 to 2025 across the state.

The players

Rock Zierman

Chief executive of the California Independent Petroleum Association trade group.

Matthew Bernstein

Vice president of North America oil and gas at the consulting firm Rystad Energy.

Chevron

An oil company that operates two refineries in California in addition to some of the state's largest oil fields.

Siva Gunda

Vice Chair of the California Energy Commission.

Paasha Mahdavi

Professor at UC Santa Barbara who directs the university's Energy Governance and Political Economy lab.

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What they’re saying

“Nobody expects today's high prices to last and we could very likely get back to the low $60 [per barrel] environment we faced just a few weeks ago.”

— Rock Zierman, Chief executive of the California Independent Petroleum Association

“Instead, companies will enjoy the added cash flow buffer of higher prices and boost cash on their balance sheets and pay out shareholders.”

— Matthew Bernstein, Vice president of North America oil and gas at Rystad Energy

“A temporary bump in price is not enough incentive to overcome the uncertainty of whether or not we can get our oil to market.”

— Rock Zierman, Chief executive of the California Independent Petroleum Association

“Let's just be like the rest of America. Let's quit this energy island that we've created for ourselves, because we're not connected.”

— Paasha Mahdavi, Professor at UC Santa Barbara

What’s next

Officials are looking into a project from Phillips 66 and pipeline giant Kinder Morgan that could deliver gasoline, diesel and jet fuel from as far as Missouri to California by 2029.

The takeaway

While high oil prices may provide a temporary financial boost for California's oil producers, the unique challenges facing the state's aging fields and the broader transition away from fossil fuels mean companies are unlikely to significantly ramp up drilling. Instead, the focus may shift to improving California's capacity to import finished petroleum products from other parts of the country and abroad.